Continental Leasing Corp. v. Lebo
| Decision Date | 13 November 1970 |
| Docket Number | No. 293,No. 275,275,Nos. 293,293,s. 293 |
| Citation | 217 Pa.Super. 356,272 A.2d 193 |
| Parties | , 8 UCC Rep.Serv. 902 CONTINENTAL LEASING CORPORATION, Appellant in, v. Leonard LEBO and Edward R. Cohen, t/a Universal Restaurant Equipment Company, Appellant inSuperior Court of Pennsylvania |
| Court | Pennsylvania Superior Court |
Herbert B. Lebovitz, Lebovitz & Lebovitz, Pittsburgh, for Universal Restaurant Equipment Co.
Samuel M. Rosenzweig, Rosenzweig & Rosenzweig, Pittsburgh, for Continental Leasing Corp.
Before WRIGHT, P.J., and WATKINS, MONTGOMERY, JACOBS, HOFFMAN, SPAULDING and CERCONE, JJ.
This action in assumpsit is based on a written contract of guaranty entered into between the plaintiff, Continental Leasing Corporation (Continental), the appellant at No. 293 April Term, 1970, and the defendants, Leonard Lebo and Edward R. Cohen, individually and as copartners, trading as Universal Restaurant Equipment Company (Universal), the appellants at No. 275 April Term, 1970, whereby Universal guaranteed the full and prompt performance by Bigelow Restaurant, Inc. (Bigelow), of its obligations under a written lease agreement which Bigelow had entered into with Continental for restaurant equipment which had been supplied by Universal to Bigelow but paid for by Continental. The original value of the equipment was $9,790, but the lease covering it was written for 60 months at $234.18 per month, including $9.01, the Pennsylvania four per cent sales tax, or a total of $14,050.80. After making an advance payment of $1,170.90 and thereafter nine monthly payments of rental, Bigelow was put into receivership, at which time there was an alleged balance of $10,870.53, in unpaid past and future rentals due under its lease with Continental. Subsequently, Continental, as a general creditor of Bigelow 1, received from the receiver a dividend of $1,195.76, which it applied on the above balance, leaving a new balance of $9,674.77, which, together with attorney fees and interest, Continental now seeks to collect from Universal as the guarantor.
Although Universal alleged in its answer several reasons by certain actions taken by Continental had released and discharged it from the guaranty contract, only two of those reasons are related to the argument now before us on this appeal. Universal contends that the lease, payments under which were the subject of the guaranty, was a security agreement under § 9--301, art. 9, Uniform Commercial Code--Secured Transactions, April 6, 1953, P.L. § 3, as amended, 12A P.S. § 9--301, and that Continental failed to comply with that provision, in that it did not perfect the security interest by recording a financing statement as required by the Code, thereby losing the protective lien against the goods covered by the lease. Universal also contends that Continental materially altered, varied, and amended the contract of guaranty, thereby releasing and discharging Universal from liability thereunder.
Continental denied that the lease was a security instrument under the Uniform Commercial Code; and it also denied that it had made any changes in the contract.
The lower court, which heard this case without a jury, was not required to make specific findings of fact and to state its conclusions of law. However, in its memorandum opinion filed with its decision (verdict) it stated that it found there was a duty on the part of Continental to file a financing statement (citing Restatement of the Law of Security, § 132); that there was no waiver by Universal of this duty; that because of Continental's failure to file such financing statement, Universal suffered a loss to the extent of the value of the goods which could not be repossessed; and that the value of the goods so lost was $3,300, the price which they brought when sold by the receiver.
The final award of damages to Continental was $5,408.03, as follows;
46 payments at $225.17 $10,357.82
Less distribution from
receivership providing $1,195.76
Less value of goods 3,300.00
Less allowance for 5,403.14
prepayment 907.38
---------------------
Net $4,954.68
Interest May 1, 1968
to November 10, 1969
at 6% 453.35
----------
$5,408.03
Both Continental and Universal have appealed. Continental alleges error in the allowance as a credit of $3,300, the value of the goods lost by its alleged failure to file the financing statement. Universal also claims error in the same particular, contending that the only evidence in the record as to the value of the goods lost established their value at $7,000 and not $3,300.
Before analyzing the problem of damages for goods lost, we shall direct our attention to Universal's second defense, i.e., that the guaranty contract was altered by Continental. The lower court did not accept that defense. However, it made no specific finding on whether the guaranty contract had been altered. The record discloses that this suit was brought on a written contract signed by Leonard Lebo and Edward R. Cohen and that the complaint alleged that they signed it as individuals and copartners trading as Universal Equipment Company, which allegation was admitted in their answer by the defendants. However, when the lease was offered into evidence at the trial, there was affixed to it as Schedule No. 1, a paper marked, 'of Guaranty of Universal Equipment Company (a partnership)'; but it was, by its terms, in fact a grant of a security interest in the lease between Continental and Bigelow, by Continental to the Union National Bank of Pittsburgh. In this instrument the lessee (Bigelow) agreed to fulfill the obligations undertaken by it in the lease and authorized the entry of judgment against it by confession. However, Bigelow did not sign the instrument. It bears only the signatures of Continental Leasing Corporation, by Ernest Nappi, and of Universal Restaurant Equipment Company, by Leonard Lebo and Edward R. Cohen.
That was the paper on which a judgment by confession was entered at D.S.B. No. 2380 July Term, 1964, in which proceeding there was filed a paper, purporting to be a true copy thereof, but containing three interlineations of the words '& guarantors' after the word 'lessee' in the clause authorizing the confession of judgment. We are convinced from the record that the original instrument did not contain these additional words and that the interlineations appeared only in the alleged copy. That proceeding to obtain a confessed judgment has been abandoned. 2 For that...
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